Factors1) Net Sales-The Company's net sales in the FY ended March 31, 2013 dropped 11.3% primarily due to a 15% decline in average aluminum prices and 2% decrease in production volumes.

2) North America-In the FY ended March 31, 2013, sales for the Company's North America operations decreased 14.2% from the previous FY. This was due to lower production volumes of flat rolled products, as well as lower average prices of aluminum.

3) Europe-Sales in Europe in the FY ended March 31, 2013 dropped 17.2% due to lower average prices of aluminum and lower shipments of flat rolled products. Specifically, the sale of the Company's European foil and packaging plants in June 2012 contributed heavily to lower production volumes.

4) Asia-In Asia, year-over-year sales decreased 3.7% due to lower average aluminum prices. This was partially offset by higher shipments of flat rolled products, particularly in the automotive and can markets.

5) South America-The Company's sales in South America increased 8.8% in the FY ended March 31, 2013 due to higher shipments of both its flat and non-flat rolled products. This was slightly offset by lower average prices of aluminum.

Major Contracts

-In 2012, the Company announced that it was selected by Jaguar Land Rover for a multi-year agreement as its sole supplier of automotive sheet products. Under the agreement, Jaguar Land Rover would use rolled aluminum from the Company for a wide range of models, including the all-new "Range Rover." This would support Jaguar Land Rover's strategy of reducing the weight of its vehicles, thereby decreasing CO2 emissions. The agreement also stipulates that the Company will be able to recover and recycle all of the aluminum scrap from Jaguar Land Rover, thus creating a closed-loop recycling system. (From a press release on September 11, 2012)

-In 2012, the Company announced that its material is featured extensively in the 2012 Mercedes-Benz "SL." The 2012 "SL" is the full-production vehicle from Mercedes with a structure designed in aluminum. Aluminum is used in the doors, hood and various structural applications in the "SL," including the transmission tunnel, which features the Company's new aluminum alloy. The new alloy, Anticorodal-300 (Ac-300) was produced through a joint collaboration between the Company and Mercedes-Benz specifically for automotive structural applications to enhance the strength and safety of the vehicle. (From a press release on May 21, 2012)

-In 2010, the Company was selected as the supplier of aluminum sheet for the BMW "5 Series" which went on sale in the spring of 2010. The model features aluminum sheets in the doors, hood, front fenders and reinforcement parts. In addition, BMW has utilized a multi-layer aluminum sheet called the Novelis Fusion for the door structures on the vehicle. The Novelis Fusion is already featured on the BMW "5 Series Gran Turismo" and the "7 Series". With this additional business with BMW, the use of the Company's aluminum sheet has been expanded to the "M3 Series", "5 Series", "6 Series", "7 Series", "X6", "X5" and "Z4". (From a press release on May 26, 2010)

-In 2010, the Company added Daimler in Asia to its customer list.

-In March 2010, the Company announced that it has been selected as the main supplier of aluminum sheets for the redesigned Audi "A8" luxury sedan. (From a press release on March 11, 2010)

-In September 2009, the Company announced that it has been selected as the sole supplier of aluminum sheets for the all-new Jaguar "XJ" sedan. (From a press release on Sep. 15, 2009)

Award

-In November 2012, the Company won BMW's "Supplier Innovation Award" in the Lightweight Construction category in recognition of its development of a new type multi-layer aluminum sheet.

R&D

R&D Expenditure

(in million USD)

FY ended Mar. 31, 2013

FY ended Mar. 31, 2012

FY ended Mar. 31, 2011

Overall

46

44

40

R&D Structure

-The Company has approximately 180 employees dedicated to research and development.

R&D Facilities

-In 2012, the Company opened its new Global Research & Technology Center in Kennesaw, Georgia, US. The 160,000-square-foot facility will be the central hub for all R&D and technical activities within the Company. The facility includes various material development and testing laboratories. Future plans for the facility include a small scale aluminum rolling mill and heat treatment capabilities for finishing aluminum sheets for automotive applications. (From a press release on June 15, 2012)

-The Company has six satellite research and technology centers worldwide in the US, Canada, Germany, Luxembourg, Switzerland and Korea.

Investment Activities

Capital Expenditure

(in million USD)

FY ended Mar. 31, 2013

FY ended Mar. 31, 2012

FY ended Mar. 31, 2011

North America

183

108

61

Europe

80

73

73

Asia

251

151

37

South America

197

177

81

Eliminations and others

64

7

(18)

Total

775

516

234

Investment in USA

<New York>-The Company is scheduled to begin operations at an automotive sheet finishing plant in Oswego, New York, US sometime in 2013. In addition, the Company has five other facilities worldwide that are scheduled to start production before the end of 2014.

<North America>-In 2011, in response to the trend toward light weight materials in the automotive industry, the Company increased its North American rolling capacity by approximately 200 kt per year for the automotive end-use market.

Investment Outside USA

<China>-In 2012, the Company broke ground at its first aluminum plant in Changzhou, Jiangsu Province, China. In April 2012, the Company signed an agreement with the Changzhou National Hi-Tech District to gain permission for the construction of the facility along with land use rights to more than 160 acres. USD 100 million has been invested in this facility in response to growing demand for rolled aluminum. The new facility is expected to begin operations in late 2014 and manufacture 120,000 metric tons of rolled aluminum per year. Aluminum coils manufactured from the Company's South Korean operations will be shipped to this new facility for heat treatment and finishing before being delivered to automotive customers in China and other markets. (From a press release on November 14, 2012)

<Germany>-In 2009, the Company marked the official start-up of a major investment at its Nachterstedt plant in Germany. The new specialist finishing capacity enhances its aluminum sheet offering to the automotive makers and increases its flexibility in meeting customer needs. (From a press release on Sep. 30, 2009)